J334 



a 
1 



LIFE INSURANCE 
FOR PROFESSORS 



'By CHARLES E, BROOKS 

Assistant Professor of Mathematics and Insurance 
in the University of California 



?H 



LIFE INSURANCE 
FOR PROFESSORS 



V 



N* 



"By CHARLES E^^BROOKS 

Assistant Professor of Mathematics and Insurance 
in the University of California 



fReprinted from the University of California Publications in Economics, Vol. 4, pp. 83-11?] 



UNIVERSITY OF CALIFORNIA PRESS 

BERKELEY, CALIFORNIA 

APRIL, 1916 






\2)\ 



(ooi 



mi 



LIFE INSURANCE FOR PROFESSORS 

A STUDY OF THE PROBLEM OF PROTECTION FOR THE 
FAMILIES OF SALARIED MEN 



BY 

CHAELES E. BEOOKS 



It is the experience of many men to find, when they undertake 
to make provision for their families by life insurance, that the 
premium rates charged by the insurance companies are so high 
that it is almost impossible for them to pay for an amount of 
insurance which is adequate to the needs of their families. This 
state of affairs bears with peculiar hardship upon those whose 
income is in the form of salary, a class to which the university 
professor usually belongs. May it not be possible that, by the 
establishment of an insurance office which shall give attention to 
the needs and resources of professors, life insurance may be 
furnished to them at rates which will bring it within their power 
effectually to assure the discharge of their obligations to their 
dependents in the event of death ? 

The problem which such an organization will have before it 
may be framed as follows: How should the principle of life in- 
surance be applied, in order to provide in the most economical 
and efficient manner for those risks which are caused by the un- 
certain duration of life, among a group of people whose economic 
and social conditions present the marked degree of uniformity 
which is the case among college faculties ? 

In any attempt to devise a system of life insurance adapted 
to the needs of a given group of people, a most important step is 
to effect a separation of those purposes which can be obtained 



4 Life Insurance for Professors 

only through insurance from such purposes as investment and 
saving for old age, which can be provided for in other ways. 

If, between the ages of thirty and thirty-five, the young pro- 
fessor, having attained a salary which will enable him to marry 
and support a family with strict economy, takes stock of his 
prospects, he finds that if his health remains good and he can 
continue to be an effective worker, he may look forward to a pro- 
ductive period of from thirty to thirty-five years with a gradu- 
ally increasing salary, followed by a modest pension for the re- 
mainder of his life. 

The young man w^ho contemplates the obligations which he has 
assumed at the threshold of his professional career and weighs 
the resources out of which he must provide them must recognize 
that the uncertainty of life confronts him with two distinct 
risks: the risk that his early death will cause deprivation to 
those who have a right to expect that he will take care of them ; 
and the risk that he will live beyond the term of his productive 
life, and be no longer able to take care of himself. His most 
important economic problem, one whose solution is a difficult and 
delicate task, is to give due weight to these conflicting risks, and 
to determine what proportion of his income may be devoted to 
the daily needs and desires of his family; what to provision 
against the destitution of his family if he die young; and what 
to provision against the time when his wages will cease to support 
him. The advice to heed the example of the thrifty ant was 
given long before the invention of life insurance, and has been 
so long incorporated in moral precepts that there is real danger 
that the partly selfish desire to store up savings will receive an 
unfair proportion of earnings, and that adequate life insurance 
will be sacrificed for the sake of accumulation. Perhaps it is pos- 
sible to arrive at some helpful conclusions on this problem. The 
mortality table shows that a man of thirty has slightly better 
than an even chance of living to be retired, which we may as- 
sume to occur at the age of sixty-five ; so that, on a basis of prob- 
ability alone, saving for old age and life insurance against the 
loss of wages seem to be nearly equally deserving of attention. 
But the mortality table has something further to say on this 
subject. Men who attain the age of sixty-five will, on the aver- 



Life Insurance for Professors 5. 

age, survive about eleven years longer, while those who die be- 
tween the ages of thirty and sixty-five fall short, on the average, 
by fifteen years of supporting their families as long as they would 
have been able to do if they had lived. Even if it is assumed that 
a man living after his retirement needs an annual income equal 
to that which his family require in the event of his death, still 
the surviving man could be supported for his average remaining 
lifetime by the investment of only about three-quarters of the 
sum which would be required for the support of a family for the 
average fifteen years of dependency. 

Thus we see that when we consider only the probabilities of 
the two cases a larger provision for life insurance than for old 
age appears desirable. When to these considerations we add that 
the needs of a family which is suddenly deprived of support are 
extremely urgent, and that there is no other way to provide for 
them than by life insurance ; but that, on the other hand, the 
provision which must be made for old age is for a remote con- 
tingency, for which a man has the whole period of his working 
years to prepare, it is reasonable to regard the duty of insurance 
as far more pressing than the duty of provision for old age. At 
the least, we may conclude that the young man at the beginning 
of his career is extremely negligent if he fail to provide life in- 
surance which will be adequate to the needs of his family in the 
event of his early death ; but that he may quite properly delay 
for a while the beginning of the accumulation of a reserve for 
his own old age, with the expectation of being able to provide for 
it from the increasing resources of his maturity. 

From the wider point of view of society as a whole, the prob- 
lem of adequate provision for the education and equipment for 
life of the rising generation far transcends in importance that of 
caring for the much smaller group of the superannuated. When 
the necessary cost of providing insurance adequate to compensate 
the family of a man who dies in early life is considered, it is 
evident that the ability of a man on the salary of a young pro- 
fessor to save is limited. It is very doubtful if it be possible 
for him to make sufficient provision for life insurance and at the 
same time to begin the accumulation of a savings fund in the 
earlier years of his professional life. It thus becomes increas- 



6 Life Insurance for Professors 

ingly evident, as the various phases of the problem are con- 
sidered, that protection of dependents is of fundamental im- 
portance, and that it should be given a prominent place of its 
own, and not treated as a mere by-product of a scheme of savings 
and investment. The importance of effecting a complete separa- 
tion of the two, so that each may be treated on its own merits, 
becomes evident. It is impossible for a man to make a wise ap- 
portionment of his expenditure between insurance and invest- 
ment, unless he know what return a given contribution to either 
will yield, and unless he be free to chose the proportion in which 
he requires each. 

As we approach the problem of deciding what provision 
should be made for the professor's family in the event of his 
death, there is a choice of method. One way is to regard the fam- 
ily as a unit, consisting of a vaguely defined group of dependents, 
entitled to receive for its maintenance a proportion of his salary 
up to the time of retirement, and needing indemnity if the salary 
be cut short by death. Under this view the aim of life insurance 
must be to continue the family income up to the time when it 
would have ceased by retirement. Provision for the family after 
the age of retirement, like provision for the professor's own old 
age, is to be regarded as a problem of savings, and not of life 
insurance. From this point of view, two requirements of insur- 
ance become very obvious. In the first place, an indemnity is 
required only in the event of death occurring before retirement, 
and as earning power continues up to death or retirement, life 
insurance should deal only with the period from entry to the 
expiration of the term at which retirement would occur. In the 
second place, as it is not likely that the sacrifice required to pro- 
vide for the payment of premiums would be less in the early 
years than in the latter, there is no reason for the limitation of 
the payment of premiums to a portion of the earning lifetime, 
nor should premiums be called for after the date of retirement. 
The event to be insured against is loss of salary after the death of 
the person insured, and in order to secure perfect insurance the 
amount of indemnity must be proportional to the number of 
years' salary lost. In other words, if the death occur early in 
life the amount of indemnity required is large, because the obli- 



Life Insurance for Professors 7 

gation which the professor has assumed toward his family re- 
mains almost entirely unfulfilled; but if the death occur near 
the end of his working life, his obligations have been almost com- 
pletely fulfilled, and the amount of indemnity required is small. 

The salient facts of mortality, as they affect a group of 1000 
families which are dependent upon the shares that they receive 
of the salaries of 1000 professors thirty years of age when they 
come under consideration, are the following : Of the 1000 families 
580 will not require any assistance from insurance, as their in- 
come will continue uninterrupted throughout the period to retire- 
ment ; and the remaining 420 families will become dependent for 
a greater or shorter period, for that number of bread-winners 
will fail to survive to the end of their productive lives. 

The deaths will be distributed as follows: 



Age group 


Number of 

deaths in the 

five-year period 


30-34 


42 


35-39 


43 


40-44 


46 


45-49 


51 


50-54 


61 


55-59 


78 


60-64 


99 



Let us now show what can be done, by the application of life 
insurance, to provide, for those families which are deprived of 
support, indemnity which shall be proportionate to the actual 
amount of deprivation suffered. In order to have a basis for 
calculation, let us make the assumption that each professor dur- 
ing his productive lifetime contributes to the support of his 
family, as distinct from his own living and professional expenses, 
the equivalent of $1,000 each year. Then, in order to assure to 
his family the continuation of this support after his death, he 
should provide by life insurance for the payment to his family 
of an income of $1,000 annually from the date of his death until 
the date at which he would have retired had he lived. We have 
just seen that of the four hundred and twenty families needing 
indemnity forty-two, or 10 per cent, will be deprived of their 



8 Life Insurance for Professors 

support during the first five years, and must be provided for by 
the equivalent of $1,000 income for from thirty to thirty-five 
years. In order to assure sucji an income, indemnity amounting 
to an average of about $20,000 for each of the forty-two families 
must be provided ; somewhat more than $20,000 for those which 
become dependent in the first year, and somewhat less for those 
which become dependent in the fifth year. In the second and 
third five-year periods, eighty-nine deaths occur, and an equal 
number of families require indemnity for periods ranging from 
twenty to thirty years. When the period for which support 
must be provided has diminished to twenty years the capital 
value of the $1,000 a year income required has diminished to 
something under $15,000, so that the amount of benefit to be 
paid at death should diminish to a similar sum. In the case of 
those men whose death occurs in their fiftieth year of age, insur- 
ance equivalent to $1,000 per year for fifteen years must be pro- 
vided, and the capital amount of such an income is almost pre- 
cisely $12,000. During the first twenty years, as the men in- 
sured increase in age from thirty to fifty, one hundred and 
eighty-two deaths will occur, requiring indemnity to as many 
families; a minimum amount of $12,000 being required in the 
cases where death occurs at age fifty. In the next ten-year 
period, as the insured progress from fifty to sixty years of age, 
one hundred and thirty-nine deaths will occur, and a similar 
number of families must be provided with incomes, ranging from 
fifteen to five years and varying in capital value from $12,000 to 
about $4,700. Almost a quarter (99 out of 420) of all the 
deaths will occur during the last five years of the period under 
consideration, but these deaths will affect families which have 
been provided for to almost the full ability of the men who sup- 
ported them, and consequently the indemnity that they require 
is small, varying from $3,800 down to $1,000 in those cases 
where death occurs in the sixty-fourth year of age.^ 



1 In this and the following calculations it is assumed that the mor- 
tality will be according to the American Experience Table, and that 
compound interest at the rate of 3i/^ per cent per annum can be obtained 
upon accumulating funds. These assumptions are used for two reasons: 
partly because they are safe, conservative assumptions, such that there 
is no doubt that plans based upon them could be actually realized in 
practice; and partly in order to facilitate comparisons with the usual 
terms of life insurance, which are based upon the same assumptions. 



Life Insurance for Professors 9 

The wide variation in the amount of indemnity needed by 
families whose bread-winners die at different ages is very clearly 
exhibited by the above figures. Another way of looking at the 
facts is to note that the total commuted value of the indemnity 
required by four hundred and twenty families is $4,453,000. Of 
this amount $2,250,000, or about one-half, is required for the 
benefit of only one hundred and thirty-one, or less than one- 
third, of the families ; while one hundred and seventy-six, or 
about 42 per cent, of the families require only $830,000, or less 
than 19 per cent of the total amount of indemnity. When we 
look at the problem in this light, it becomes very evident that 
any plan of life insurance which provides a constant amount of 
indemnity, regardless of the time at which the indemnity becomes 
necessary, falls far short of meeting the requirements of families 
of the economic status that we are considering. It is perfectly 
clear that life insurance of the ordinary type will not furnish 
adequate protection against the danger of dying in the early 
years of life without including at the same time very much more 
than the protection needed in the case of one who dies toward the 
end of his earning period. 

To meet the conditions described, by insurance, the direct 
and obvious thing to do is to provide an income which will take 
the place of that contributed from the salary of the professor and 
cease at the time his salary would have ceased if he had lived. 
This can be carried out most easily by what is called in actuarial 
language ' ' yearly term insurance ; ' ' that is to say, each year 's 
premium is intended to provide only for the claims that will 
occur during that year. /o 

In the table on pagec9D is shown in detail the indemnities 
needed year by year, and the premiums or contributions re- 
quired to provide them, in order to furnish insurance in the form 
of an income of $1,000 a year, beginning at the death of the per- 
son insured, and continuing to the date at which he would have 
been sixty-five years of age. In the first three columns are 
given, respectively, the year of insurance, the age attained by 
the insured during that year, and the number of annual install- 
ments required if death occur during that year. In the fourth 
column, headed "Commuted value of $1,000 yearly income," 



10 



Life Insurance for Professors 



I. INSUEANCE BY YEARLY TERM PREMIUMS, TO PROVIDE $1,000 

ANNUAL INCOME FROM DEATH TO DATE AT WHICH 

RETIREMENT WOULD HAVE OCCURRED. 



(1) 

Year of 
Insurance 


(2) 

Age attained 

by insured 

at beginning 

of year 


(3) 

No. of 

Installments 


(4) 

Commuted value 

of $1,000.00 

yearly income 

at 3 Vz per cent 

interest 


(5) 

Net yearly 

term premium 

for $1,000.00 

income 


1 


30 


35 


$20,701.00 


$168.65 


2 


31 


34 


20,390.00 


167.67 


3 


32 


33 


20,069.00 


166.89 


4 


33 


32 


19,736.00 


166.24 


5 


34 


31 


19,392.00 


165.45 


6 


35 


30 


19,036.00 


164.53 


7 


36 


29 


18,667.00 


163.93 


8 


37 


28 


18,285.00 


163.14 


9 


38 


27 


17,890.00 


162.62 


10 


39 


26 


17,482.00 


161.91 


11 


40 


25 


17,058.00 


161.42 


12 


41 


24 


16,620.00 


160.72 


13 


42 


23 


16,167.00 


160.14 


14 


43 


22 • 


15,698.00 


159.51 


15 


44 


21 


15,212.00 


159.17 


16 


45 


20 


14,710.00 


158.66 


17 


46 


19 


14,190.00 


158.51 


18 


47 


18 


13,651.00 


158.27 


19 


48 


17 


13,094.00 


158.26 


20 


49 


16 


12,517.00 


158.51 


21 


50 


15 


11,921.00 


158.72 


22 


51 


14 


11,303.00 


158.79 


23 


52 


13 


10,663.00 


158.55 


24 


53 


12 


10,002.00 


157.84 


25 


54 


11 


9,317.00 


156.59 


26 


55 


10 


8,608.00 


154.45 


27 


56 


9 


7,874.00 


151.28 


28 


57 


8 


7,115.00 


146.66 


29 


58 


7 


6,329.00 


140.24 


30 


59 


6 


5,515.00 


131.72 


31 


60 


5 


4,673.00 


120.52 


32 


61 


4 


3,802.00 


106.08 


33 


62 


3 


2,900.00 


87.67 


34 


63 


2 


1,966.00 


64.48 


35 


64 


1 


1,000.00 


35.63 



Life Insurance for Professors 11 

is given the capital sum which, invested at 3I/2 per cent, will just 
suffice for the payment of $1,000 annually for the number of 
years indicated in column three. In column five, under the 
heading ''Net yearly term premium per $1,000 income" are 
stated the premiums which are sufficient, according to the Ameri- 
can Experience Table of Mortality and 3% per cent interest, 
to provide insurance for one year at the age attained (column 
two) for the amount stated in column four. It will be noted 
that the yearly premium is not a fixed amount, but varies from 
age to age. It is fairly constant between the ages of thirty and 
fifty-five, but decreases rapidly after that. The table shows that 
if a man aged thirty wishes to assure his family an income of 
$1,000 per year for the period from his death until the date 
when he would have retired, he must pay a premium of $168.65 
for the first year, $167.67 the second year, and gradually decreas- 
ing amounts in the following years. In the year during which 
he reaches age forty his premium will be $161.42, in the year in 
which he reaches age fifty his premium will be $158.72, and for 
the year during which he reaches age sixty his premium will be 
$120.52. It will diminish rapidly in the remaining years, and 
for the last year, at age sixty-four, a premium of $35.63 is all 
that is required. 

The yearly term plan of insurance is the simplest and most 
direct plan of life insurance that can be devised. Each year's 
premiums just suffice for the payment of the claims which fall 
due in that year, and there is no reserve accumulation. In the 
case of whole life insurance by the yearly term plan it is found 
that the premiums increase very rapidly with advancing age. 
The result is that persons insuring for their whole lives under 
this plan find as they reach old age that the yearly term premium 
required becomes prohibitive. It was to meet this objection that 
the level premium form of insurance was devised. As is shown 
in the table, for life insurance under the plan we have outlined 
the net yearly premiums decrease with advancing age, so that 
the condition which makes yearly term insurance undesirable 
for the whole life form does not exist in this case. 

In the foregoing pages we have defined, somewhat arbitrarily, 
certain circumstances under which men in the conditions given 



12 Life Insurance for Professors 

require life insurance, and we have shown how insurance can be 
employed to meet these precise conditions. We have outlined 
what we will call for convenience the first plan of insurance for 
professors. Let us now proceed to examine it in detail and to 
compare it critically with the ordinary system of insurance. This 
first plan of insurance consists briefly of an effort to adapt the 
amount of insurance which will become payable at the death of 
the person insured to the precise obligations which the deceased 
will leave unfulfilled. To carry out this idea it is assumed that 
the man who lives to attain the age of retirement and who has 
supported his family through that period has done for them all 
that he could reasonably have undertaken to do, and we have 
rp.easured the loss caused by the death of a man before his retire- 
ment by the number of years' support which he has failed to 
give. 

It will be seen, by reference to the table of premiums, that the 
cost of insurance of this kind is reasonable, and that it ought to 
be within the power of a man to assure his family an income 
after his death which will suffice for their necessities. Let us 
see how insurance of this kind edmpares with the ..ordinary life 
policy, in the case of a man of thirty years of age, contributing 
$1,000 yearly for the support of his family. The highest 
premium which he would have to pay under this plan for an 
income of $1,000 a year in case of his death is the premium for 
the first year, $168.65, and the average yearly premium for -the . 
following twenty years is about $163. Let us see what amount 
of ordinary life insurance an annual premium of $168.65 will 
purchase. The net annual premium for ordinary life insurance 
at age thirty is $17.10 per $1,000 insurance. At that figure 
$168.65 will pay for $9,810 of insurance. We have already seen 
that if death occur between the ages of thirty and thirty-five the 
commuted value of $1,000 annual income which the family of 
the insured would receive according to the proposed plan is 
about $20,000, so that the man who had taken the ordinary life 
policy would leave his family in case of his death at this time 
only half of the necessary indemnity. If death occur at the age 
of forty-five it would require $15,000 insurance to furnish in- 
demnity equivalent to that which would be obtained under the 



Life Insurance for Professors 13 

plan suggested ; and even if death occur as late as in the fiftieth 
year of age, $12,000 of life insurance would be needed to pro- 
duce the income which that plan would supply. It is only in the 
case of those dying as late as the fifty-fourth year of age that 
the ordinary life insurance purchased for the annual premium 
stated '-will produce an income as great as that furnished under 
the above plan. Of course, it is quite evident that in the cases 
where death occurs in the years between ages fifty-five and sixty- 
four the ordinary life policy wall produce the greater income. 
But we have seen that of 1,000 men aged thirty,. 232 will die 
before age fifty-five ; that is to say, considerably more than half 
of the families needing insurance will receive more under this 
plan than under the ordinary life plan, and most of these will 
receive very much more. 

If, for the purpose of comparison, we consider the case of a 
man entering the insurance scheme at the age of forty the an- 
nual premium which this plan requires for insurance for $1,000 
income is $161.42. This amount paid annually will purchase 
$6,850 of ordinary life insurance at the American Experience 
3% per cent net rate of $23. 5C per $1,000. If in this case death 
occur in the first year $6,850 will provide an income of onlj- 
$403 and if death occur at age fifty it will provide an income of 
$577. It is only in the case of those dying at fifty-seven that this 
amount of insurance will purchase approximately $1,000 income. 
Evidently, the advantage of this plan of insurance over the 
ordinary life plan is greater for those entering at middle age 
than it is for those entering earlier. 

The reason for the unfavorable showing of the ordinary life 
policy is not far to seek. Under the plan proposed, premiums 
have been computed which will just suffice for the payment, in 
the case of those who die, of the indemnity which seems necessary. 
When the persons insured reach the age of sixty-five we have 
assumed that their obligations to their family have been ful- 
filled, and that no further insurance is necessary. Protection is 
furnished for the amount needed during the period in which it 
is needed, and at the expiration of that period the insurance 
ceases. No further premiums are called for from the insured 
and there is nothing on hand in the insurance fund. The ordi- 



14 , ' Life Insurance for Professors 

nary life policy, on the other hand, provides for a stated amount 
of insurance to be paid at the death of the person insured. The 
same benefit is paid no matter at what age the death occur. In 
order to provide for insurance under the ordinary life plan by 
equal annual premiums it is necessary to charge premiums higher 
in the earlier years than the actual cost of insurance during those 
years, and to accumulate the excess at interest, in order to make 
good the deficiency that would otherwise occur in the later years 
of life on account of the very high death rate of those years. If 
the man who had insured at age thirty for $9,810 ordinary life 
insurance lives to be sixty-five years of age and desires to dis- 
continue his insurance he finds that his policy is worth a few 
cents less than $5,200, and this amount he can receive from the 
company upon surrendering his policy. In effect, the ordinary 
life policy requires the man who can afford to pay $168.65 a year 
for life insurance to be content with much less life insurance 
than the needs of his family require through a considerable 
period of his life, in orde:^ that he may save $5,200 by the time 
of his retirement. 

The ordinary life policy, which is the form most commonly in 
use, requires a very much larger contribution of premiums in 
order to provide equivalent compensation; and the higher 
premium of the ordinary life policy is made necessary by the 
combination of a considerable element of investment with the 
protection furnished. It is because the ordinary life policy en- 
forces an arbitrary ratio of investment to protection, which in 
most cases is disproportionate to the savings capacity of the 
profec jor, that it is not suitable to his requirements. 

A very marked difference between the methods of life insur- 
ance, as generally conducted, and of fire insurance is clearly 
seen in a comparif? n of the contracts made by the two kinds of 
companies. The standard form of life insurance policy states 
the amount of insurance, and records the obligation of the com- 
pany to pay that sum upon evidence that the person insured is 
dead. The fire insurance contract, on the other hand, is an agree- 
ment by the company to make good losses caused by fire ; and the 
amount stated in the policy is a maximum limit, and will be paid 
only in the event of the destruction of property of equivalent 



Life Insurance for Professors 15 

value. After a fire has occurred an examination is made to 
ascertain the precise amount of destruction, and the fire insur- 
ance company pays indemnity proportionate to the damage done. 
When a man whose life is insured dies, the life insurance com- 
pany pays the full amount of the policy, and its efforts to ascer- 
tain whether the person receiving the money has actually suffered 
a loss are confined to guarding against the grosser forms of 
speculative insurance. The fire insurance companies base their 
payments of indemnity upon the actual damage done by fire be- 
cause their experience has taught them that in the case of the 
majority of fires the damage is trivial. Many fires cause a con- 
siderable amount of damage, but those in which total destruction 
of the property insured occurs form only a small proportion of 
the fires. 

Now it is obvious that the losses caused by death distribute 
themselves in very much the same way. Comparatively few men 
die in youth and early middle age, and they represent the total 
losses ; in the middle years of life the number of deaths is higher, 
and these represent the partial losses because they- have partly 
fulfilled their obligations to their dependents. The majority of 
men live through their working years and die in old age. From 
an economic point of view these are the trivial losses, for they 
have completed their work and the amount of real dependence 
which they leave is very small. The analogy with the cost of 
fire losses is so close as to suggest that a plan of life insurance 
which undertakes to proportion the amount of indemnity to the 
amount of loss sustained, as is done in the case of fire losses, 
would be an immense improvement over the plan of treating all 
deaths as total losses no matter at w^hat age they occur. The cost 
of life insurance would be reduced in this way, just as the cost 
of fire insurance would be increased if all fires were regarded as 
total losses in the settlement of claims. 

To regard deaths which occur in early life as causing total 
losses, those which occur in middle life as partial losses, and 
those which occur after retirement as trivial losses, is more than 
an analogy : it is really a true view of the facts, for by losses we 
mean economic losses caused by interruption of wage-earning 
power. It is because the ordinary life insurance plan provides 



16 Life Insurance for Professors 

full indemnity for the partial and trivial losses, which occur 
with increasing frequency with advancing age, that the cost of 
insurance becomes so high in the latter years of life, and that 
the accumulation of reserve funds becomes necessary. If it 
sound harsh to speak of the deaths occurring in old age as caus- 
ing trivial losses, the same facts may be stated in a different 
manner. The statement that the loss caused by the death of one 
who is no longer a wage-earner is negligible must stand, for it is 
true. In what light, then, must the payment of a considerable 
sum under a life insurance policy in such a case be regarded ? 
Clearly it is not indemnity for loss of support. It is not really 
insurance at all. Of the two factors which combine to cause 
risk, one is zero, and the other is very small. There is no loss of 
wages because there are no wages, and there is comparatively 
little uncertainty regarding the duration of life of a man who 
has passed the age of retirement. The truth is that money col- 
lected as life insurance in the case of a man whose death occurs 
after retirement is more justly regarded as the realization of an 
investment. This view is strengthened by the fact that in the 
later years of life the reserve or cash value of an ordinary life 
policy falls very little short of the face amount of the insurance. 
Thus a $1,000 policy of ordinary life insurance issued at age 
thirty which has been kept in force until the insured reaches age 
sixty-five has a cash value of $530, and if it be kept in force ten 
years longer this is increased to $700. The cash value increases 
rapidly thereafter, and becomes actually equal to the amount of 
insurance if the person insured reaches the age of ninety-six. The 
reserve fund which the company holds on account of such a policy 
is an accumulation of the premiums paid by the insured, and it is 
as really the property of the insured as if it had been accumulated 
in a savings bank and not by a life insurance company ; and it is 
payable to him on demand and the surrender of his policy.^ 



2 An examination of the customary policy will reveal that it contains 
essentially two contracts. One is an obligation of the insurer to pay a 
stated sum, called the amount of insurance, at the death of the insured. 
The other is, practically, a promise to pay on demand an accumulating 
fund. The true amount of insurance, that which is contributed in co- 
operation by all the group insured, is the difference between the cash 
surrender value (practically the same as the reserve) and the so-called 
amount of insurance. 



Life Insurance for Professors 17 

We have compared the plan of insurance proposed with 
ordinary life policies based upon the payment of premiums an- 
nually until the death of the insured, as this is the form for 
which the annual premiums are the lowest. Endowment poli- 
cies and life policies paid for by a limited number of premiums, 
of which the twenty-payment life is the most popular, differ 
from the ordinary life policy chiefly in the more rapidly accu- 
mulating reserve. For this reason they are even more unsuitable 
to the requirements and resources of the professor than the ordi- 
nary life plan. 

Forms of life insurance which involve the accumulation of 
large reserve funds are open to criticism for another reason. As 
we have endeavored to make clear, such contracts are essentially 
a combination of insurance with investment. Even in the case 
of persons whose economic position enables them to provide in- 
surance sufficient for their needs and in addition to save syste- 
matically for purposes of investment, it may fairly be questioned 
if an insurance office is the best medium for the handling of sav- 
ings. Against the risk of loss by the early death of the wage 
earner, co-operative insurance is practically the only available 
method of provision, but there are many opportunities for in- 
vestment open to the private individual, as well as many co- 
operative institutions designed purely for the care of savings. 
Life insurance is most successfully carried on by organizations 
of considerable magnitude, insuring a large number of lives, and 
involving the operation of an expensive plant. Much of the 
organization necessary for the conduct of a life insurance busi- 
ness is by no means necessary for the handling of savings funds, 
and it is therefore doubtful if the results obtained by the life 
insurance companies on the investment side can ever be as satis- 
factory as those obtained by institutions devoted entirely to the 
care of savings. It is true that the life insurance companies of 
the United States have made a magnificent record in the profit- 
able and safe investment of their great reserve funds, but it must 
be remembered that this is not the whole story. The satisfactory 
interest rate obtained on the reserve fund is not a net return to 
the insured. Life insurance companies incur heavy expenses for 
the collection of premiums, and for the extension of their busi- 



18 Life Insurance for Professors 

ness by advertising and by personal solicitation. In some cases 
they pay special insurance taxes and license fees. There is every 
reason to believe that that portion of the premium destined for 
investment bears its share of these insurance expenses. So long 
as it is impossible for the insured to know what portion of his 
premium is for investment, it will remain difficult for him to 
know whether he is getting a satisfactory investment or the 
contrary. 

Let us now attack our problem from a different point of view. 
By abandoning the conception of the professor 's family as a unit, 
and giving attention to the needs of the individuals of whom it is 
composed, we shall be led to formulate a second plan of insurance. 

Most men of the class we are considering, will feel that if 
they can provide adequately for the support and education of 
their children during their minority, in the event of their own 
deaths, it will be all that they can reasonably expect to do for 
them, but that they should make some provision which will 
assure to their widows an income sufficient for their mainte- 
nance as long as they may survive. Insurance which will pro- 
vide surely for these conditions, and for nothing more, either in 
the form of accumulation of savings or in the form of payments 
if the beneficiaries intended to be protected no longer need pro- 
tection, is the most economical that can be devised, and is the 
nearest approach that voluntary life insurance can make to the 
ideal of adjusting the indemnity to the actual loss. The precise 
need of each dependent can be supplied by an indemnity which 
shall take the form of an assured income, to be paid during the 
period of dependency, but to cease in the event of death. The 
form of life insurance called a reversionary annuity meets just 
such cases, and this is the form of insurance which will enable 
the salaried man to provide most surely for the risks of his death 
by the least present sacrifice. 

The most important provisions of a contract for a reversion- 
ary annuity for the benefit of a wife are the following. That 
in the event of the death of the hubsand the widow receives a 
stated income, payable throughout her lifetime, however long 
that may be, but ceasing at her death. In the event of the death 
of the wife during the life of the husband the contract termi- 



Life Insurance for Professors 19 

nates, as the insurance is no longer required. To bring it most 
easily within the reach of a professor, such a contract may be 
paid for by equal annual premiums, payable only to the time of 
retirement, and ceasing, of course, in the event of the death of 
either the insured or his wife. 

The premiums for reversionary annuities depend upon the 
ages of both the insured and the beneficiary, for the reason that 
the younger a beneficiary is the more likely she is to survive the 
insured. In Table II, which follows, the premiums are given for 
reversionary annuities in cases where husband and wife are of 
equal age, and in cases where the wife is five years younger than 
the husband. The premiums stated are payable annually, but 



II. EEVERSIONARY ANNUITIES 

Income of $100.00 Payable Annually so Long as the Beneficiary 

Survives the Insured. Limited Annual Premiitnis, Last 

Payment When Insured is Sixty-Four. 



Age of 
Insured 


Beneficiary 

same age as 

insured 


Beneficiary 

five years 

younger than 

insured 


25 


$18.23 




30 


19.21 


$21.92 


35 


20.66 


24.02 


40 


22.78 


27.16 


45 


26.01 


31.78 


50 


31.05 


39.17 


55 


40.42 


52.72 


60 


66.12 


90.10 



III. ORDINARY WHOLE LIFE INSURANCE 

Net Premiums for $1,000.00 Insurance Payable at Death. Limited 

Annual Premiums, Last Payment When Insured 

is Sixty-Four. 



Age of 
Insured 

30 


Maximum 
number of 
premiums 

35 


Premium 
for$l,000.( 

$18.72 


35 


30 


22.28 


40 


20 


27.37 


45 


20 


35.07 


50 


15 


47.77 


55 


10 


72.26 


60 


5 


141.86 



20 Life Insurance for Professors 

in no case is any premium paid after the insured reaches age 
sixty-four. A table of rates for whole life insurance, premiums 
to cease at age sixty-four, is added for comparison. It will be 
seen that at the younger ages the premiums for the reversionary 
annuity of $100 a year are comparable with the annual premiums 
for ordinary life insurance of $1000, but that at the higher ages 
a $100 reversionary annuity is considerably cheaper than a $1000 
life insurance policy. Thus at ages' 35-35 $100 reversionary an- 
nuity will cost $20.66 annually, and a whole life policy with 
premium ceasing at age sixty-five $22.28 ; whereas at ages 45-45 
the annuity premium is $26.01, contrasted with the twenty- 
payment life premium of $35.07 at age forty-five. The life an- 
nuity which $1000 will purchase at 3^/2 P^r cent interest by the 
American Experience Table of Mortality is much less than $100 
at all ages and varies from about $50 annually for a person aged 
twenty-five to $90 annually for a person aged sixty. At all ages 
there is very marked difference in favor of the reversionary 
annuity. 

The reversionary annuity for the wife in the event of the 
death of the husband, which we have suggested, provides for 
the support of the wife after the death of the husband, whether 
the husband's death occurs before or after retirement. This is 
the plan which would probably appeal to the majority of men; 
but there is no reason why the benefit under this sort of policy 
may not be limited to apply only in those cases in which the 
man insured dies before the age of retirement. Such a modi- 
fication would allow a considerable reduction in the premiums 
required, and would be desirable if the professor's retirement 
allowance provided for the continued support of his widow. 

The provision for children, in the case of the death of their 
father during their dependent years, can most easily be made 
in the form of an income for each child for the years elapsing 
between the death of the parent and the date at which the child 
may be expected to have completed its education and to have 
become able to take care of itself. It will be seen that insurance 
of this sort is comparatively inexpensive. There are some tech- 
nical difficulties which make it impracticable to provide for such 
insurance by equal annual premiums. The most practicable 



Life Insurance for Professors 21 

plan is to adopt the yearly term insurance basis, the premium 
changing from year to year, and being determined by the age of 
the insured and the age of the child at the date of paying the 
premium. This plan has the slight disadvantage that premiums 
vary from year to year, but it has the advantage of allowing 
modification in the amount of insurance to meet varying needs. 
In Tables Y and VI are given the premiums required for each 
year's insurance for an annual income of $100, the first payment 
at the death of the insured and the last payment when the 
beneficiary attains the ages of sixteen and twenty respectively. 
The age of the parent is given at the side of the table and the age 
of the child at the top. For example, in order to find the prem- 
ium for the year during which the insured reaches age forty-three 
and the beneficiary reaches age seven we look under seven and 
opposite forty-three, and find $10.52. 

We have now outlined the modifications which it is believed 
would produce life insurance much more suitable to the circum- 
stances of the university professor than that which is offered by 
the established life insurance companies. Let us try to antici- 
pate the criticisms which the representative of an old-line com- 
pany might make. One point which such a man might raise 
w^ould be to say that the forms of insurance proposed are not 
particularly novel. The first plan proposed, he would say, is 
nothing more or less than term insurance, which is offered by 
nearly all insurance companies, although not quite in the form 
that we have suggested. It is quite true that term insurance is 
offered by insurance companies, and that a man who knew what 
he wanted, and who refused to take a substitute, could secure 
insurance very nearly equivalent to the plan which we first sug- 
gested. One way of obtaining approximately the same result is 
to secure term policies of different amounts for terms of dif- 
ferent lengths. Thus if a man aged thirty secured a thirty-five 
year term policy of $5000, a thirty-year term policy of $5000, 
a fifteen-year term policy of $5000, and a ten-year term policy 
of $5000 he would have insurance roughly equivalent to that 
which we found necessary to secure an annual income of $1000 
from the time of his death to the date at which he would have 
retired. The benefit under these policies in case of his death 



22 Life Insurance for Professors 

would correspond roughly with the capital value of the $1000 
annuity desired, but there would remain to his beneficiary the 
difficult}^ of investing the proceeds in such a way as to produce 
just that annuity. The ten- and fifteen-year term policies he 
would probably have no difficulty in securing, as most companies 
issue them; the thirty- and thirty-five year term policies are 
unusual and he might have trouble in inducing the company 
which he preferred to issue them. He could be sure, however, 
that on every premium date he would be visited by an agent 
who would seek to convince him of the advantage of changing 
his insurance to the ordinary life form. 

A more significant reply to the insurance man, whose argu- 
ment we are considering, is, that while the companies do offer 
term insurance they do not make very great efforts to explain 
to people requiring insurance the desirability of using the term 
policy. Agents are not encouraged to advertise term insurance 
policies and they are paid smaller commissions on them than on 
ordinary life and endowment policies, so that it is not to the 
interest of the soliciting agents to urge term insurance. It is 
probably fair to say that the typical insurance agent mentions 
term insurance only as a last resort, when he is fully convinced 
that he cannot persuade his prospect to take an ordinary life or 
endowment policy. The mortality experience of the companies 
is not as favorable under term insurance as under whole life 
insurance, but this is the result of an adverse selection, which 
would hardly occur if term insurance were more extensively 
written. It may be suggested that it is to the advantage of the 
executive of a life insurance company to have the trust fund 
under its control grow as rapidly as possible ; and that the term 
insurance policies, which require little or no reserve, do not add 
much to the importance of an insurance office as a financial insti- 
tution. Whatever the reason may be, the fact remains that the 
general attitude of the life insurance companies toward term 
insurance is one of discouragement. It is for this reason that 
the establishment of an office which would make special efforts 
to point out the usefulness of term insurance in certain circum- 
stances, and would provide such insurance, would confer a benefit 
upon a large number of men. 



* Life Insurance for Professors 23 

Another argument which the insurance man would be justi- 
fied in using is to say that life insurance companies have experi- 
mented with a ^reat many forms of insurance contracts designed 
to meet varying needs, but that their experience with these de- 
partures from the ordinary life policy and the endowment policy 
have not as a rule been encouraging. They find that the agent 
is handicapped by the necessity of explaining unfamiliar and 
complicated contracts and that he can work most successfully 
with the ordinary policy with which he and his client are both 
reasonably familiar. This argument is undoubtedly sound, but 
it must be remembered that during the past hundred years the 
insurance companies have devoted a great deal of ability and 
money to the training of agents to sell the ordinary forms of 
insurance and to educate the public to the acceptance of such 
forms. The demand for life insurance is natural, but the de- 
mand for the ordinary forms of insurance is to a certain extent 
artificial. The fact that the commercial companies find that they 
can conduct their business more profitably upon the ordinary 
plans, and that their clients prefer the ordinary plans, hardly 
seems to be a sufficient reason why an office seeking to furnish 
the most suitable insurance to a special class of persons should 
not try other forms of insurance. 

The whole trend of our discussion has been to point out the 
desirability of separating investment from life insurance. In 
defense of the combination of investment with insurance it is 
frequently urged that life insurance in its ordinarj^ form en- 
forces saving, and that the regular payment of the insurance 
premium leads men to make savings which thej^ would not other- 
wise make; so that, even admitting that more profitable invest- 
ments for savings can be found than through the life insurance 
companies, nevertheless millions of dollars have been accumu- 
lated by the life insurance companies which would never have 
been saved without their assistance. In reply to this we may 
admit the desirability of saving in any form, without weakening 
our position that those who need insurance, but who are not 
able to make considerable saving, should be given an oppor- 
tunity to secure insurance without the investment of an accumu- 
lation which they cannot afford. 



24 Life Insurance for Professors 

The advocate of the insurance companies vvill point out that 
the companies have observed the desirability of the payment of 
insurance benefits in the form of annuities, or of incomes for 
definite periods, rather than the payment in one sum; and that 
they have very earnestly advocated policies payable in this way 
and have included in nearly all of their policies proyision for 
pa^'ment in installments if the insured shall so direct or if the 
beneficiary shall so desire. Particular prominence has been given 
by insurance companies to a form of payment which is called 
continuous installments. Policies having this feature provide 
that, in the event of a claim the sum insured shall be payable in 
a specified number of equal annual (or monthly) payments, and 
in addition that the installments shall be continued to the bene- 
ficiary designated, after the specified number have been paid, so 
long as the beneficiary shall live. This is a very desirable form 
of policy, and comes much nearer to meeting the requirements 
which we are considering than the ordinary life policy payable 
in one sum. The continuous installment plan, however, provides 
for the payment of a certain number of installments whether 
the beneficiary whom it is intended to protect be living or not, 
and it is therefore considerably more expensive than the rever- 
sionary annuity which we have advocated. Although it is more 
desirable than the ordinary form, the w^hole-life continuous in- 
stallment policy nevertheless contains the feature which makes 
ordinary life insurance so unsatisfactory, that is, the provision 
for full payment even though the insured die in old age, which 
must be regarded as a form of investment and not of true 
insurance. 

In European countries, and especially in France, the business 
in annuity contracts of various forms has received a consider- 
able development, but that has not been the case in the United 
States. Our insurance companies have made efforts to extend 
the use of annuities, but without marked success. The reasons 
for this state of affairs are not altogether clear, but two con- 
tributory causes may be mentioned. The rate of return possible 
under a life annuity depends upon two things: the interest rate 
which can be realized and the mortality among the annuitants. 
The insurance companies, in order to be secure in their business, 



Life Insurance for Professors 25 

cannot promise more than a very conservative rate of interest 
on contracts which, like the annuities, are apt to cover long 
periods of time ; and for this reason the return which they can 
offer does not compare favorably with the high return which 
many business men in America are able to secure on their capital. 
The result has been that Americans as a rule have not invested 
in annuities, and have desired to have their life insurance pay- 
able in full and not in installments. The very fact that the 
return from annuities is not large produces a condition which 
in turn reacts upon the insurance company and forces the retui^n 
from annuities still lower. It is the fact that among the persons 
who do invest in annuities there is not experienced the ordinarj^ 
rate of mortality. Persons whose health is in any way impaired 
will not invest in life annuities, and among those who do so invest 
there is an unusually large proportion of extraordinarily long- 
lived persons. 

A large proportion of the clients of the insurance companies 
are business men whose beneficiaries frequently have opportun- 
ftities of investment which promise a larger return than can be 
promised under installment contracts, but there is reason to be- 
lieve that in many cases the temptation of high returns leads to 
unfortunate results. As a rule the beneficiaries of professors' 
life insurance are apt to be less able to invest the proceeds of 
their insurance to advantage than are those in the world of 
business, so that the plans of insurance providing fixed incomes 
which we have suggested are especially desirable for them. 

It is important to point out that, although the low mortality 
of annuities is shown by experience, that experience has been 
with persons who have purchased annuities on their own lives. 
It is very probable that if reversionary annuities were used in 
the way we have advocated the annuitants would represent a 
fair sample of professors' wives, and would not on the average 
have a mortality rate very different from the general population. 
In order to guard against an adverse mortality in the case of 
the beneficiaries of reversionary annuities, one important re- 
striction must be made. When such a policy has once been 
issued it is not possible to allow either the insured or the bene- 
ficiary to exercise any option to change the mode of settlement 



26 Life Insurance for Professors 

or to substitute a new beneficiary. If such a policy is lapsed the 
reserve cannot be returned to the insured as a cash surrender 
value, but must be used to carry out the original contract with 
such a reduced income as it will suffice to pay for. The loss of 
the privilege of surrendering for cash will not be a serious dis- 
advantage, for the reversionary annuity policy does not require 
the accumulation of very large reserve funds. 

In the foregoing discussion so much emphasis has been laid 
upon the desirability of avoiding the accumulation of funds as 
insurance reserves that it is pertinent to consider what accumu- 
lations must be made by an organization issuing insurance in 
accordance with the plans we have outlined. When we inquire 
how the funds which must be held by such an organization in 
order to fulfill its obligations will compare in magnitude with 
the similar funds of an ordinary company we must be careful 
to take as a basis of comparison things really comparable. Under 
the ordinary plan, as claims occur their full amount is paid to 
the beneficiaries; but under the plans we are considering the 
beneficiaries are not to receive' full settlement at once, but are 
to receive annuities or payment in installments. The office which 
administers life insurance under these plans will have in fact 
two quite distinct accounts : one for insurance and one for the 
installments and annuities. The insurance branch will receive 
the premiums of the insured, and when a claim occurs will dis- 
burse the commuted, or capitalized, value of the income which 
is to be provided, and it will be charged with such reserves as 
are necessary to provide for the contracts in this way. It will 
deal entirely with the persons insured, and such funds as it 
controls will be comparable in all ways with reserve accumu- 
lations of the ordinary company and will be open to the same 
objections. The annuity branch will receive the commuted value 
of the incomes or annuities from the insurance branch and will 
care for them as funds held in trust for the beneficiaries. These 
trust funds, held to carry out the provisions governing the man- 
ner of payment of indemnities for deaths which have occurred, 
are on an entirely different basis from the accumulations under 
the ordinary life contracts, and are not subject to the criticisms 
which apply to the latter. 



Life Insurance for Professors 27 

In the case of insurance under the yearly term plan the re- 
serve in the insurance account is inconsiderable, because in each 
year the claims occurring will consume all the premiums col- 
lected; the installment account will hold large funds, but these 
will not be subject to mortality contingencies at all. 

Those reversionary annuities which provide for protection 
during the whole lifetime of the insured, but are paid for by 
premiums ceasing at sixty-four, will require an insurance reserve 
of the same character as the ordinary life reserve, but very much 
less in proportion to the premiums paid, as the table shows. 

IV. TERMINAL RESERVES 

Reserves for $1000.00 Whole Life Insurance, Issued at Age 35, Annual 

Premiums of $22.28 Ceasing at Age 64, Compared With Reserves 

FOR $100.00 Reversionary Annuity, Issued at Ages 35-35, 

Annual Premiums of $20.66, Ceasing at Age 64 



Year of 
Insurance 


Reserve 

for $100.00 

annuity 


Attained 

Age of 

Insured 


Reserve 

for $1,000.00 

insurance 


5 


$ 28.00 


40 


$ 76.00 


10 


62.00 


45 


166.00 


15 


100.00 


50 


271.00 


20 


142.00 


55 


392.00 


25 


191.00 


60 


528.00 


30 


256.00 


65 


688.00 


35 


227.00 


70 


747.00 


40 


191.00 


75 


800.00 


45 


151.00 


80 


849.00 



In Table IV above the reserve required by a reversionary 
annuity of $100 for insured and beneficiary both thirty-five 
years of age at the issue of the policy is compared with that of a 
$1000 life insurance policy. In both cases the benefit is paid 
even though the insured die after the age of retirement. An- 
nual premiums are assumed, the payment of which is limited to 
the period before retirement; that is, the last premium is pay- 
able when the insured reaches age sixty-four. It will be seen 
that the two reserves do not differ materially during the earlier 
years, but that the maximum reserve under the annuity policy 
is only $256, which is reached in the thirtieth policy year. From 
that time on the reserve diminishes, and it vanishes when the 



28 Life Insurance for Professors 

insured reaches ninety-six, which is the fictitious limit of age. 
Under the ordinary life insurance policy the reserve increases 
each year and finally, at age ninety-six, is equal to the sum in- 
sured. It grows very rapidly and at the end of the premium- 
paying period is $688, or more than three times the reserve held 
under the annuity policy in the same year. The effect of the 
constant increase in the reserve on the whole-life policy is cumu- 
lative, so that the total reserve fund held for ordinary life 
insurance will grow more rapidly and attain a much higher 
maximum than the reserve held for reversionary annuity policies 
of a corresponding premium income. 

The discussion which we have made leads us to conclude that 
other forms of insurance than those customarily offered will 
enable men whose incomes are derived from their salaries to 
provide more fully for the protection of their dependents than 
they can with the opportunities which are now available for 
insuring. It seems therefore highly desirable that the experi- 
ments should be made of establishing an insurance office which 
will offer the opportunity to secure insurance that is not bound 
up with a considerable element of investment. The establishment 
of such an insurance scheme for the benefit of professors would 
be not only directly beneficial to them but might perform a very 
useful service to a wider group of people by inducing the insur- 
ance companies to devote more attention to the need of insurance 
as distinguished from the need of opportunity for investment. 



TABLES V AND VI 



30 Life Insurance for Professors 



V. CHILD'S EEVEESIONAEY ANNUITY 

Yearly Term Premium per $100.00 Annuity, First Payment at Death of Insured; 
Last Payment When Beneficiary is Twenty Years of Age. 



Age of 
Insured 


1 


2 


3 


Age of Beneficiary 
4 5*6 


7 


8 


9 


10 


30 


$10.24 




















31 


10.45 


$10.85 


















32 


10.57 


10.47 


$10.22 
















33 


10.70 


10.61 


10.35 


$10.01 














34 


10.84 


10.74 


10.49 


10.14 


$ 9.75 












35 


10.98 


10.88 


10.62 


10.27 


9.87 


$ 9.43 










36 


11.16 


11.06 


10.79 


10.44 


10.03 


9.58 


$ 9.09 








37 


11.33 


11.24 


10.96 


10.60 


10.19 


9.73 


9.23 


$ 8.70 






38 


11.55 


11.45 


11.17 


10.80 


10.38 


9.92 


9.41 


8.86 


$ 8.26 




39 


1L77 


11.66 


11.38 


11.01 


10.58 


10.10 


9.59 


9.03 


8.44 


$ 7.83 


40 


12.02 


11.92 


11.63 


11.25 


10.81 


10.32 


9.79 


9.23 


8.62 


8.00 


31 


12.29 


12.18 


11.89 


11.49 


11.05 


10.55 


10.01 


9.43 


8.81 


8.18 


42 


12.58 


12.47 


12.17 


11.77 


11.31 


10.81 


10.25 


9.66 


9.03 


8.37 


43 


12.91 


12.80 


12.48 


12.07 


11.61 


11.08 


10.52 


9.90 


9.25 


8.59 


44 


13.29 


13.18 


12.86 


12.43 


11.95 


11.41 


10.83 


10.20 


9.53 


8.85 


45 


13.70 


13.58 


13.25 


12.82 


12.32 


11.77 


11.16 


10.52 


9.83 


9.12 


46 


14.19 


14.07 


13.73 


13.28 


12.76 


12.19 


11.56 


10.89 


10.17 


9.45 


47 


14.73 


14.60 


14.24 


13.78 


13.24 


12.65 


12.00 


11.30 


10.56 


9.80 


48 


15.36 


15.22 


14.85 


14.36 


13.80 


13.18 


12.51 


11.78 


11.01 


10.22 


49 


16.09 


15.95 


15.56 


15.05 


14.47 


13.81 


13.11 


12.35 


11.53 


10.71 


50 




16.77 


16.36 


15.82 


15.21 


14.53 


13.78 


12.98 


12.13 


11.26 


51 






17.26 


16.69 


16.05 


15.33 


14.54 


13.70 


12.80 


11.88 


52 








17.67 


16.99 


16.22 


15.39 


14.50 


13.54 


12.57 


53 










18.03 


17.21 


16.33 


15.39 


14.37 


13.34 


54 












18.34 


17.40 


16.39 


15.31 


14.21 


55 














18.57 


17.49 


16.34 


15.17 


56 
















18.73 


17.50 


16.25 


57 


















18.77 


17.43 


58 




















18.74 



Life Insurance for Professors 31 



V. CHILD'S EEVEKSIONARY ANNUITY— (Continued) 

Yearly Term Premium per $100.00 Annuity, First Payment at Death of Insured; 
Last Payment When Beneficiary is Twenty Years of Age. 

Age of Beneficiary 
12 13 14 15 16 17 18 19 



Age of 
Insured 


11 


40 


$7.32 


41 


7.48 


42 


7.66 


43 


7.86 


44 


8.09 



$6.77 

6.93 $6.18 

7.11 6.34 $5.53 

7.32 6.53 5.70 $4.83 



45 8.34 7.55 6.73 5.87 4.98 $4.05 



46 


8.64 


7.82 


6.97 


6.08 


5.16 


4.20 


$3.21 






47 


8.96 


8.11 


7.23 


6.31 


5.35 


4.36 


3.33 


$2.27 




48 


9.34 


8.46 


7.54 


6.58 


5.58 


4.54 


3.48 


2.36 


$1.20 


49 


9.79 


8.86 


7.90 


6.89 


5.85 


4.76 


3.64 


2.48 


1.26 


50 


10.29 


9.31 


8.31 


7.25 


6.15 


5.00 


3.83 


2.60 


1.32 


51 


10.86 


9.83 


8.77 


7.65 


6.49 


5.28 


4.04 


2.75 


1.40 


52 


11.50 


10.40 


9.28 


8.09 


6.86 


5.59 


4.28 


2.91 


1.48 


53 


12.20 


11.04 


9.85 


8.59 


7.28 


5.93 


4.54 


3.09 


1.57 


54 


12.99 


11.76 


10.49 


9.15 


7.76 


6.31 


4.84 


3.29 


1.67 


55 


13.87 


12.55 


11.20 


9.77 


8.28 


6.74 


5.16 


3.51 


1.78 


56 


14.85 


13.44 


11.99 


10.46 


8.87 


7.22 


5.53 


3.76 


1.91 


57 


15.94 


14.42 


12.87 


11.22 


9.52 


7.74 


5.93 


4.03 


2.05 


58 


17.13 


15.50 


13.83 


12.06 


10.23 


8.33 


6.38 


4.33 


2.20 


59 


18.47 


16.71 


14.91 


13.00 


11.03 


8.97 


6.87 


4.67 


2.38 


60 




18.04 


16.10 


14.04 


11.91 


9.69 


7.42 


5.04 


2.57 


61 






17.41 


15.19 , 


12.88 


10.48 


8.03 


5.46 


2.78 


62 








16.46 


13.96 


11.36 


8.70 


5.91 


3.01 


63 










15.14 


12.32 


9.44 


6.42 


3.26 


64 












13.38 


10.25 


6.97 


3.54 



32 Life Insurance for Professors 



VI. CHILD'S EEVERSIONARY ANNUITY 

Yearly Term Premium per $100.00 Annuity, First Payment at Death 

OF Insured; Last Payment When Beneficiary is 

Sixteen Years of Age. 



Age of 
Insured 

30 


1 
$8.76 


2 


Age 
3 


of Beneflc 

4 


iary 
5 


6 


7 


8 


31 


8.85 


$8.64 














32 


8.95 


8.74 


$8.38 












33 


9.07 


8.85 


8.49 


$8.06 










34 


9.18 


8.96 


8.60 


8.17 


$7.67 








35 


9.30 


9.08 


8.71 


8.28 


7.77 


$7.23 






36 


9.45 


9.23 


8.85 


8.41 


7.90 


7.34 


$6.73 




37 


9.60 


9.37 


8.99 


8.54 


8.02 


7.46 


6.83 


$6.23 


38 


9.78 


9.55 


9.16 


8.70 


8.18 


7.60 


6.96 


6.35 


39 


9.97 


9.73 


9.34 


8.87 


8.33 


7.75 


7.09 


6.47 


40 


10.19 


9.94 


9.54 


. 9.06 


8.51 


7.91 


7.25 


6.61 


41 


10.40 


10.15 


9.74 


9.25 


8.69 


8.08 


7.40 


6.75 


42 


10.66 


10.41 


9.99 


9.48 


8.91 


8.28 


7.59 


6.92 


43 


10.94 


1067 


10.24 


9.73 


9.14 


8.50 


7.78 


7.09 


44 


11.26 


10.99 


10.55 


10.02 


9.41 


8.75 


8.01 


7.31 


45 


11.61 


11.33 


10.87 


10.33 


9.70 


9.02 


8.26 


7.54 


46 


12.02 


11.74 


11.26 


10.69 


10.05 


9.34 


8.56 


7.80 


47 


12.48 


12.18 


11.69 


11.10 


10.43 


9.70 


8.88 


8.10 


48 


13.01 


12.70 


12.20 


11.57 


10.87 


10.11 


9.26 


8.44 


49- 


13.63 


13.30 


12.77 


12.12 


11.39 


10.59 


9.70 


8.85 


50 


14.33 


13.99 


13.42 


12.75 


11.98 


11.14 


10.20 


9.30 


51 




14.75 


14.18 


13.45 


12.64 


11.75 


10.76 


9.82 


52 






14.99 


14.23 


13.37 


12.43 


11.39 


10.39 


53 








15.11 


14.19 


13.20 


12.09 


11.02 


54 










15.12 


14.06 


12.87 


11.74 


55 












15.01 


13.74 


12.54 


56 














14.71 


13.42 


57 




• 












14.40 



Life Insurance for Professors 33 



VI. CHILD'S EEVERSIONARY ANNUITY— (Continued) 

Yearly TERii Premiu^e per $100.00 Annuity, First Payment at Death 

OF Insured; Last Payment "When Beneficiary is 

Sixteen Years of Age. 



Age of 
Insured 


9 


10 


Age of Beneficiary 
11 12 


13 


14 


15 


38 


$5.66 














39 


5.77 


$5.04 












40 


5.90 


5.15 


$4.38 










41 


6.02 


5.26 


4.47 


$3.64 








42 


6.18 


5.39 


4.58 


3.73 


$2.85 






43 


6.34 


5.54 


4.70 


3.83 


2.92 


$1.99 




44 


6.53 


5.71 


4.85 


3.94 


3.01 


2.05 


$1.04 


45 


6.73 


5.88 


5.00 


4.07 


3.10 


2.11 


1.07 


46 


6.97 


6.09 


5.18 


4.22 


3.23 


2.19 


1.10 


47 


7.23 


6.32 


5.37 


4.38 


3.35 


2.29 


1.15 


48 


7.54 


6.59 


5.60 


4.56 


3.50 


2.38 


1.21 


49 


7.90 


6.90 


5.87 


4.78 


3.65 


2.50 


1.27 


50 


8.31 


7.26 


6.17 


5.02 


3.85 


2.62 


1.33 


51 


8.77 


7.66 


6.51 


5.30 


4.06 


2.77 


1.41 


52 


9.28 


8.19 


6.88 


5.61 


4.30 


2.93 


1.49 


53 


9.85 


8.60 


7.30 


5.95 


4.56 


3.11 


1.57 


54 


10.49 


9.16 


7.78 


6.33 


4.86 


3.31 


1.68 


55 


11.20 


9.78 


8.30 


6.75 


5.18 


3.53 


1.79 


56 


11.99 


10.47 


8.89 


7.24 


5.55 


3.78 


1.92 


57 


12.87 


11.23 


9.54 


7.76 


5.95 


4.05 


2.05 


58 


13.83 


12.07 


10.25 


8.35 


6.40 


4.35 


2.21 


59 




13.01 


11.05 


8.99 


6.90 


4.67 


2.39 


60 






11.93 


9.71 


7.45 


5.06 


2.58 


61 








10.48 


8.05 


5.48 


2.79 


62 










8.72 


5.93 


3.02 


63 












6.42 


3.27 


64 














3.54 



LIBRARY OF CONGRESS 

11 



019 737 622 3 



